Owners Corporation enforcement of By-Law - Inappropriate Action Costs Consequences

24/04/2015

Recently Mark approached Richard Watson for assistance to respond to a claim by an Owners Corporation with demands concerning an alleged breach of a by-law.  Mark was concerned that he was targeted in that there were other blatant breaches by others within the strata complex and there appeared to be no action taken against the other owners for those breaches of the same by-law.

Mark denied any breach of the by-law.  The Owners Corporation had various alternatives available including:

1.         A reasonable discussion with Mark as to their real concerns;

2.         To seek an injunction restraining Mark from breaching the by-law; and/or

3.         To seek a civil penalty from Mark for breach of a by-law.

The Owners Corporation sought a civil penalty (the maximum for a first offence is $500) for a claimed breach of a by-law.  The action was taken in the NSW Civil & Administrative Tribunal (NCAT).  Most often the person who is met with such a claim does nothing because of the high cost of defending the claim. 

However, Mark sought and obtained Richard Watson’s advice and appropriately considered the matter and as it appeared to be a targeted claim against Mark personally, Mark after due consideration of the matter  defended  the claim.

At a considerable cost to Mark the claim was defended and the Owners Corporation was unsuccessful in obtaining any order against Mark.

The Owners Corporation have been ordered to pay Mark’s costs which will exceed $10,000. 

If you are on an Executive Committee you need to take responsibility for the high level of obligations in particular where the strata complex is one in which there are many units.  The Executive Committee should consider what are the obligations of each of the lots owners and how persons will be affected by day to day decisions of the Executive Committee.  Do no just agree with the decisions of a vocal few on the Executive Committee without proper consideration of the legality, effect and cost of action.

Similarly, if you are an owner within such an Owners Corporation, it would be appropriate for you to not allow the Owners Corporation decision to be run by a few Members if you do not agree with the course being adopted by those Members. 

In the above case, not only did the Owners Corporation have to pay their own lawyers but will have to pay Mark’s legal fees. 

The total cost to the Owners Corporation will be in excess of $20,000 for what was claimed by the Executive Committee to be a very minor breach of a by-law.  The assertion of a breach was not found by the Tribunal Member.  In any event, there were many breaches which continue by other owners of the by-law that the Executive Committee attempted to enforce against Mark.

There are many lessons to be learnt by all concerned.

Before taking any action, in particular by commencing proceedings including an Application with the NCAT, serious consideration needs to be given to the consequences.   At Watson & Watson we are approached on a regular basis to assist Owners Corporations and Owners to attempt to resolve issues that arise between them.  In numerous cases the Owners Corporation or Owner is required to take appropriate course which will include attempted negotiations, commencing proceedings or defending proceedings.

By-laws and other rules are incorporated into the strata living as a way of seeking to put in place rules for the benefit of all.  Having all owners to comply with by-laws is one of the great issues that confront the Executive Committees, Owners Corporations and Strata Managers.   However, before taking action for enforcement of a by-law or taking action for breach of a by-law we suggest that you careful consider be given to the consequences. 

Before taking any legal actions or action in the NCAT we suggest you obtain appropriate legal advice.

Richard Watson of Watson and Watson is available to provide advice and this very emotionally charged area of dispute which adversely affects our day to day living which comes with strata living.